Our major accomplishments this year are in the following areas:[unreadable] [unreadable] 1) Role of Noggin in ear development[unreadable] [unreadable] Noggin is a secreted molecule that functions as an antagonist of Bone morphogenetic proteins (BMP) by binding to BMPs and prevent them from activating their receptors. In humans, mutations of the NOGGIN gene is associated with several disorders that are characterized by synotosis and conductive hearing loss. We analyzed the inner ears of Noggin knockout mutant embryos and we show that the mutant inner ears have malformations in both the membranous and bony labyrinths. We provided evidence that the membranous labyrinth defects are due to the misalignment of the rhombomeres and otocysts positions during early stages of embryogenesis. Malformation of the cochlear duct is the most prevalent membranous phenotype in these mutants. In addition, there is an increase in the size of the bony labyrinth. The increase in chondrogenesis within the bony labyrinth is most likely due to an unopposed BMP signaling in the peri-otic mesenchyme. Our preliminary results also suggest that some of the heterozygous Noggin mutants display hearing loss, similar to human patients with NOGGIN mutations.[unreadable] [unreadable] 2) Role of Gli proteins in inner ear development[unreadable] [unreadable] Our previous studies have shown that Sonic hedgehog emanated from either the floor plate or the notochord is a major factor in dictating ventral patterning of the inner ear. To address how Shh mediates this effect, we analyzed inner ears of mouse embryos with various genetic combinations of mutant alleles of Shh, Gli2, and/or Gli3. Our results show that different inner ear structures along the dorsal ventral axis is established by different levels of Gli activator and repressor activities, regulated by different levels of Shh. The most ventral region of the inner ear, the distal cochlear duct, requires Gli activator functions mediated by high levels of Shh signaling. The formation of the middle region of the inner ear, the saccule and the proximal region of the cochlear duct, requires moderate levels of Shh signaling to either alleviate the Gli3 repressor activities or to activate some Gli activators. On the other hand, Gli3 repressor activity is essential for the proper formation of the dorsal vestibular structures. Together, these results indicate the importance of Shh in mediating balanced levels of Gli activator and repressor activities for the formation of the inner ear.